tv Taking Stock With Pimm Fox Bloomberg September 8, 2014 10:30pm-11:01pm EDT
>> this is taking stock. today's scene is on the road. alibaba launches its initial public offering roadshow and the chief executive hits the big apple. what investors want to know. we will tell you. apple's big event is tomorrow in california. we will find out how the supplier of the company can put you on the road to success. a bumpy road ahead for trump entertainment at the companies filing bankruptcy again. all that and more over the next hour. first let's find out our
headlines from our colleagues. >> facebook's market value exceeded $200 billion today. facebook rose to more than $77 per share. the company's stock has jumped more than 9% since late july when facebook reported second-quarter sales rose 61% thanks in large part to mobile ads. twitter is testing a buy button. the consumer can purchase items directly. they are teaming to save a person's credit card information. yahoo! shares climbed more than 5% today. the company is set to get an $8 billion windfall from alibaba's ipo. the giant kicks off the investor
roadshow today in new york. yahoo! is selling 121 million shares and keeping a 16% stake. >> we are going to talk more on alibaba. former sec capital manager was sentenced to nine years in prison. patricia, give us the details of the sentencing. >> the lawyer asked the judge for sentence of two to three years. he had to factor in the fact that the amount of money, the hedge fund, in may $275 million. >> patricia, is it possible mark, can help the state and the federal officials in their ongoing investigation of sac capital and that would change anything in his sentence?, it seems kind of late for that. he was given the opportunity when the fbi went to him.
apparently there were more discussions. there could have been talks again and he gets sentenced today. he is going to prison on november. the prospect of nine years away from his family will do it for him. >> patricia reporting from lower manhattan. let's turn our attention to the big alibaba roadshow. cory johnson joins us from san francisco. leslie has been following this case closely.
also with me is drew bernstein, a comanaging partner. he represents more than 50 chinese companies. welcome to all of you. tell us where in the roadshow alibaba is. >> jack moll was here today. he was in new york city. there was a line of investors. apparently 800 came. he didn't speak for that long. it is conducted by a credit suite. jack ma spoke about the company's vision, how he is a man for small business. he was very candid with the audience and telling them that he is not the type of person who would be an investor relations kind of guy.
he is there for the customer first, and the investor third. >> one of the things also mentioned was betting on alibaba on china, it is the debt on global business because alibaba is not going to be content with just going after 1.3 billion people in china. >> i think the interesting thing on the international circuit is how they do in europe and particularly russia. i think them competing in the u.s. against the likes of amazon is going to be difficult. amazon could compete with alibaba in china. given the market in russia, i think that is going to be the interesting place, to watch how they compete. >> the idea that alibaba is a competitor not just in china that in russia, is this because they serve the middleman or those that want to buy and those that want to sell? >> they have a better logistics and better
payment process for various companies to export, particularly in a larger more wholesale capacity to the global audience. they have the internal payment structure, logistics, the brand name. their model is just to do everything but the expensive fulfillment and inventory hold -- they can do that in areas that might be unfairly shaky ground with the dominant countries. >> you had a chance to go through the filing of alibaba. what should investors be wary of? >> there is obviously the big china risk. what is legal today may not be legal tomorrow.
that might not be up to them. and there is the fact that you have one guy leading this company who holds enormous sway over it by stake of his stake in the company. >> that could be a good thing. >> you are all in with jack moll -- jack ma on this deal. investors are not buying shares of the company. they are buying shares and something is -- they do not have the same kind of control they would if they bought shares in a general mills or berkshire hathaway or a yahoo!. >> on one hand he is the most dynamic ceo in china. on the other hand he controls 100% of this. >> explain what the structure is that they own a shares in a company that gets a royalty from alibaba.
>> basically a variable interest entity is a method by which you own the economics of the transaction without owning the assets through management contracts. on one hand the beauty as you have someone like jack ma who is a genius. he has created the largest company in the world who services go across the board. and then the other hand, if he decides at some time that he wants to avoid these contracts what do you do? >> would that stop you from investing? >> in this particular instance probably know because my understanding of it is only about 12% of the structure that is in this. i would be less concerned about it. this has been an issue that has little clarity from the chinese side. >> you mentioned jack moll. -- jack ma. where does he go if you have not been able to catch the roadshow?
>> sources are telling me he may not attend all of the big group lunches. that is something he wasn't even sure he was going to attend today and decided to make an appearance and show his face to new york. it is unclear right now where he will be if you will be in boston. it is still kind of up in the air. >> would you buy shares in this initial public offering if you could? >> i would do so with real caution. i think the bigger part is the u.s. has an increasingly poor relationship with the chinese government. look at apple, look at google. the issue here is for today alibaba is a one country play. huge potential, does things elsewhere. all those numbers are china numbers. if there are problems in those relationships then you may be on the wrong side of that structure. >> thank you very much.
coming up bloomberg will have extensive come fridge of alibaba. it is a documentary that aired tonight with never before seen footage of the early days of the company tom along with some interviews with the founder jack ma. it is right here only on bloomberg television. a new report shows big gains for online video in the second quarter of this year. we will find out what it means for the advertising industry. that is all coming up. it is mystery guest monday. my mystery guest is professionally polished. when you find out more. this is "taking stock" on bloomberg.
>> this is "taking stock." competition for online video is searching. is traditional tv doomed? not so fast according to my next guest. he is the chief executive of tremor video, specializing in video advertising for all types of entertainment platforms. before we get to tremor video and the competition between television and online, give us a little background. you were there at the very beginning for a company called about.com. >> i am super privileged to have been in the internet and digital space for over 27 years now. i started at a company called prodigy way back in the day. we were able to take it public and sell it. i have seen the beginning of targeted advertising and search-based advertising. now it is all about video advertising.
>> video advertising across all different platforms. it is a television broadcast as well as an online experience. >> predominantly online at the moment. i'm we're talking mobile devices, which can include tablet. you can see into the future how what reduced us to touch television. video on demand over the top. >> advertising on traditional television seems to be stagnant at best. you are seeing this big growth online. is it a mistake to ignore tv advertising? >> what many people know is television is very large. there is a lot going on there. what i see you think is going on -- i think what you see is going on is consumption shifting. even if the tv is on in the
living room i think of television today as the music of the living room. it's on, are you paying attention? if you can advertise online we found that is how you get the best experience to create this sort of situation. you don't get that today but you can do it if you coordinate city -- video and television together. >> what would be an example that the video does. >> we will look at specifically when people engage with advertising. it is what is going on on the tv set for a particular time. we see what shows are playing and tried to coordinate what we're showing based on what is on at the time.
>> apple will unveil its newest smartphone and wearable technology tomorrow. one of the companies behind this technology used in the screens -- with more on the suppliers i am joined by adam in san francisco. alex steele joins me here. it is pretty cool. what does the screen do that you can't already do? >> the idea is it will be a cover and will be scratch resistant. the wear and tear will be a lot less.
if it goes on the ground you will not break it. that is the theory. we are not talking about that glittery stuff on your finger. this is all synthetic. it is really hard. a the scratch resistant part has been proven. it is a question of will it be unbreakable? it can hold a lot more weight than glass but once you break it it is completely shattered. >> why is this such a big improvement? you might think he getting a new phone is something they want you to do on a regular basis of scratching it is not a bad thing. >> they had to go in and spend $150 on a new screen. the upgrade cycle might be changed because of that. the idea is not that they are going to replace all of their
phones, the idea is you can choose to pay for it and then that's why you can upgrade. >> it is like an add-on. >> that's the issue. >> what about the makers? >> they signed a deal back in 2013. apple supplant the company to basically tilde sapphire. these on the fingerprint sensor for the iphone. the idea is there is a lot of issues behind ramping stuff up. they don't have full supply yet. we have a great agency over and france that studies sapphire. do the math with that. >> them a -- do you want something you can wear on your wrist? >> apple already uses it over the home button on some of the most recent iphones. in small quantities it has been used. it is probably going to look like a watch.
>> as part of the launched tomorrow is there anything you're going to be looking for, the near field communications that allows you to pay for items ? >> i am interested in hearing what partners to announce. this has been something that has been tried before. a lot of people have gone down this road and it hasn't worked
out. apple is a lot -- apple is able to get a lot of the big chain retail stores on board. that might give it a bit of an advantage over others. how that payment system works with the wash of ice would also be interesting. >> there are 280 suppliers that are making the guts of the phone. a semi conductor as well as lg display co. macgowan how online. are there any that are going to
be made or broken as a result of this introduction? any new companies? >> apple has got $170 billion in revenue next year. that is on par with the gdp. they are in economy to themselves. a lot of suppliers are tied to the company. gp advances is one example you were talking about before. their stock has more than doubled. there is serious logic could get 70% of their revenue from apple. these are companies that are tied at the hip with apple. they are dependent on them to continue to churn out these devices and buying their components. for example, taiwan semi or. taiwan semiconductor.
>> another company that supplies chips that go into this phone. >> you can see it with gt technologies. that was a widely known partnership. there is so much baked in here. there is no way it is going to live up to these massive expectations. >> you said 35 million phones? >> that is how much the apple shifted. 6.3 million is what they could be making per quarter. >> it will be a bigger screen. this is what we are all looking forward tomorrow. >> the bigger the screen the more expensive. would you pay hundred dollars -- pay $100 for a scratch free phone?
peter three in san francisco, welcome to bloomberg west. i am in for emily chang. on a headlines. , theook's market value first time ever making facebook the 22nd most valuable company in the way of -- world. ahead of toyota. stocks rise with mobile sales accounting for 62 percent of all ad sales in the second quarter.